Economic Analysis of Poultry Egg Marketing in Oredo and Egor Local Government Areas of Edo State, Nigeria

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1 International Journal of Agricultural Marketing Vol. 5(2), pp , November, ISSN: IJAM Research/Technical Note Economic Analysis of Poultry Egg Marketing in Oredo and Egor Local Government Areas of Edo State, Nigeria *Oluwatuyi Toyin Bukola 1, Eronmwon Iyore 2, Emokpae Osayi Precious 3 1,2,3 Department of Agricultural Economics and Extension services, Faculty of Agriculture, University of Benin, Benin City, Nigeria The study analyzed the marketing of Poultry eggs in Oredo and Egor local government area of Edo state. It specifically described the socio-economic characteristics of the poultry egg marketers and determined the market conduct, performance of the egg market, marketing margin, profitability, effect of marketing cost on the magnitude of the marketing margin and the constraints that affected egg marketers in the study area. Structured questionnaire was randomly administered to 100 respondents in 4 purposively selected egg markets based on egg market concentration in order to gather relevant data. Data gotten were analyzed using descriptive statistics, budgetary techniques and the ordinary least square model. The result indicated that egg marketing in the area was dominated by females who were mostly married and had experience in poultry egg marketing. Results from the study also indicated a fairly good market performance as market margin per crate of egg and market efficiency were fairly good. The marketers were exploitative in setting their prices as the mark-up took a greater share of the total margin. The BCR indicated that the business was viable. The result of the regression analysis showed that marketing costs (transportation, storage, market levy and tax) greatly influenced the marketing margin realized from poultry egg marketing in the study area. Credit and Loan facilities should be made easily accessible to the marketers as they complained about the lack of accessibility to loan and credit facilities. Keywords: Poultry Egg, Marketing Margin, Market conduct and performance, Profitability. INTRODUCTION Poultry products provide animal protein which is essential to mankind, their meat and eggs provide a suitable substitute to other sources of animal protein (Olukosi et al2007). Poultry products are consumed all over the world and the consumption has over the last decade increased across the globe. Their relatively low cost of production, rapid growth rate, high nutritional value and the introduction of many new processed products have been attributed to the recorded increase in consumption (Barbut, 2001). According to Oji and Chukwuma (2007), the poultry goes a long way in providing animal protein for the populace, because it yields quick returns and provides meat and eggs in a very short time. In Nigeria, egg production increased so dramatically that the west regional government started an egg marketing scheme in 1962 to mitigate a glut in the market (David West, 2008). The egg as a major product of poultry is one of the most nutritious and complete food known to man. Being the cheapest per unit source of animal protein, eggs are more readily affordable by the populace than other sources of animal protein (Abanikannda et al, 2007). According to Esingmer (1991) and Banerjee (1992) the poultry eggs nearly approach a perfect balance of all food nutrients. The yolk and albumen contain 17.5 and 10% protein by weight, respectively. Egg marketing would be highly beneficial to the society as it would eliminate the shortage in the supply of poultry products, thereby, bridging the gap between the demand and supply of products in the market and at the same time serving as a source of income for those who engage in its production (Afolabi, 2002). *Corresponding Author: Oluwatuyi Toyin Bukola, Department of Agricultural Economics and Extension services, Faculty of Agriculture, University of Benin, Benin City, Nigeria. toyintuyi93@gmail.com. Tel: Co-Author 2 omoyore@yahoo.com; 3 osayi.emokpae@uniben.edu

2 Oluwatuyi et al. 195 Economic analysis can be defined as the analysis done using payments and value of all items at their value in use or the opportunity cost to the society. It is the comparison of cost with the benefit of a project in order to determine which alternative project has acceptable return, Olayide and Heady, 1982). Olukosi et al. (2007) defined marketing costs as the actual expense incurred in the performance of the marketing functions as commodity moves from the farm to the ultimate consumers. It includes the cost of transport, handling, marketing charges, and cost of assembling, processing, distributions, packaging sales promotion and advertisement cost and other costs such as taxes, levies and excise duties. Ekunwe and Alufohai (2009) reported in their study that the marketing of egg in Benin City, Edo State, Nigeria was highly profitable and viable; however, their study did not take into consideration the effects of the marketing costs on the magnitude of the marketing margin. This study was conducted to fill in this gap. The specific objectives of this study were to determine the socioeconomic characteristics of the egg marketers, to examine the market conduct and performance of egg marketing, to determine the profitability and marketing margin of egg marketing in the study area, and to determine the effect of marketing cost on the marketing margin. METHODOLOGY Study Area This study was conducted in Oredo and Egor, local government areas of Edo state, Nigeria. This study was carried out in some of the major markets of the local government area where poultry marketing was majorly concentrated. Edo state is an island state in central southern Nigeria, with Benin City as its capital. It is bounded in the north and east by Kogi state, in the south by Delta state, and in the west by Ondo state. Edo state is noted for the following agricultural products; rubber, cashew nuts, cocoa and is blessed with precious stones like quartz, mica, dolomite, granite and lime stone used in cement production. Sampling Procedures, Data Collection and Data Analysis A two stage sampling technique involving random and purposive selection was used to select 100 respondents. The first stage involved the purposive selection of two markets from each of the local governments, making it a total of four markets. The second stage involved the random selection of 25 marketers from each market, making a total of 100 marketers. Primary data was obtained using a structured questionnaire and personal oral interview to retrieve information from the respondents. Data collected were analyzed using descriptive statistics, budgetary techniques and the ordinary least square regression model. The specific objectives were to; determine the socio economic characteristic of the respondents, determine the conduct and performance of the egg market, estimate the market margin and profitability of egg sellers, determine the effect of marketing cost on the magnitude of the marketing margin. Descriptive statistics, such as frequency distribution, percentages and mean were used to analyze the socioeconomic characteristics; market conduct was analyzed using descriptive analysis of the egg marketers. Budgetary techniques were used to analyze the market efficiency and profitability of poultry egg marketing. Profitability Analysis Profitability analysis was estimated using gross margin analysis, net return, and benefit cost ratio. Gross Margin =Total Revenue Total Variable Cost (1) Where: Total Revenue = Price per crates x Quantity of crates sold and Total Variable Cost = Total Cost Total Fixed Cost Net return was analyzed using the total profit and is given as Net returns= Gross Margin Total Fixed cost.. (2) Return per naira was used in assessing the viability of the business and is given as Return per Naira Invested = Profit/Total Costs invested.(3) Benefit cost ratio was also used in analysing the viability of the business and the decision rules were BCR > 1 The business is viable BCR = 1 Break Even point BCR<1 The business is not viable Benefit Cost Ratio (BCR) = Present value of total benefit in naira Present value of total costs in naira (4) Market Performance Analysis Market performance was estimated using marketing margin, market efficiency and gross margin analysis, as shown in Equations. Marketing efficiency = (Net Profit) x 100 (5) Total Marketing Cost 1 Gross Margin = Total Revenue Total Variable Cost.(6) Where, Total Revenue = Price per crates x Quantity of crates sold andtotal Variable Cost = Total Cost Total Fixed Cost

3 Int. J. Agric. Mark. 196 Marketing Margin = C.P P.P.. (7) Where, C.P is consumer price andp.p is producer s price Ordinary least Square Regression Model The ordinary least square regression model was used to ascertain the effect of marketing cost on the magnitude of the marketing margin. The implicit model employed was: Y = f(x1, X2, X3, X4, X5, X6 e). (8) While the explicit form of the equation is Y=b0 + b1x1 + b2x2 + b3x3 + b4x4 +b5x5+e. (9) Where, Y =Marketing margin, X1 = Transportation cost ( /month/trader), X2 = Storage cost ( /month/trader), X3=Market Charges ( /month/trader), X4=Tax/Ticket ( /month/trader), X5= Security Costs ( /month/trader), e = Error term. The various constraints affecting egg marketing in the study area was determined using a 5 point Likert scale. The constraints were ranked based on the level of severity into very serious=5, serious=4, moderately serious =3, least serious =2, not serious =1. For a given constraint, the mean was computed by summing the scores of each item and then dividing by the total number of responses. The mean Likert scale point served as a benchmark to know the level of severity of a particular constraint. If the mean was less than three it means that the particular constraint was not serious, while any mean equal to or greater than 3 means that the particular constraint was serious. RESULTS AND DISCUSSION Socioeconomic Characteristics The result in Table 1 indicated that majority of the egg marketers were female, very young and in their active age, married showing that they have responsibilities and households to cater for, this agree with the findings of Ekunwe and Alufohai (2009) who observed that poultry egg marketing in Benin City (Edo, Nigeria)) shows a market dominated by female marketers (96.7%) who have a mean age of 45 years and are married (82.1%). The result also showed that 42.6% had obtained at least secondary school education and also had an average marketing experience of 5 years. This is in consonance with the findings of Mohammed et al. (2013) who found out a mean marketing experience of 5 years among egg marketers in Kuje area of Abuja, Nigeria. Market Conduct and Performance of Egg Marketing in the Study Area Market Conduct Through interactions with the egg marketers in the study area it was found that most of the marketers attracted the consumers through open display and persuasive efforts. The marketers determined their price by the haggling ability of the consumers, purchase price and quantity demanded. There was, however, no market association for the product so the marketers acted individually. Market Performance From the Marketing margin per crates of egg and Market efficiency as seen in Table 2 the result indicated a fairly good market performance. Market Margin and Profitability of Egg Marketing in the Study Area Marketing Margin The result of the average marketing margin as presented in Table 2 shows that there was a price difference of N92.62 per crate of egg. Mark up accounted for 70.15% of the total marketing margin while storage cost accounted for 9.07% of the total margin and transportation costs accounted for 7.81% of the total margin. This shows that the marketers were exploitative in their price as the mark-up took a greater share of the total margin. This finding is in agreement with Ekunwe and Alufohai (2009) report who realized a marketing margin of N60.67($0.17.) and noted that it also took a greater portion of the total marketing margin in Benin, Nigeria. Profitability analysis of egg marketing in the study area The result of the gross margin analysis presented in Table 3 shows that on the average, the respondents traded 294 crates per month and this cost them N168, ($460) which represents about 96.38% of their total variable cost. An average egg marketer incurred a total variable cost of N174, ($477.28) per month, total revenue of N195, ($534.49). The gross margin of an average egg marketer was N20, ($57.21) for 294 crates per month while net return per seller was N20, ($56.41) per month. The findings from this study is in agreement with the findings of Okpeye and Ellah (2017) who reported a gross profit margin of N772,200($ ) and net profit margin of N747,500 ($ ) per marketer per annum in the South part of Nigeria. The result also shows a return per naira of 0.12 which means that for every N1 invested into the business it yielded N0.12. The result of the marketing margin and profitability analysis therefore shows that egg marketing is a profitable business and should be one to be ventured into. Viability test of egg marketing The analysis showed that the business had a BCR of The BCR indicated that egg marketing is viable in the study area. This also collaborates with Ekunwe and Alufohai (2009) finding, where they realized that egg marketing in Benin city is very viable (BCR = 1.10).

4 Oluwatuyi et al. 197 Effect of marketing cost on the marketing margin The result of the F value (27.793) was significant (P < 0.05), indicating the goodness of fit of the regression. The result of the regression analysis used in determining the effect of the marketing cost on the magnitude margin is shown in Table 4, the regression estimates shows a fairly good fit for the model as shown by the coefficient of determination (R 2 = 0.597). The adjusted R 2 implies that, the independent variables (transportation cost, storage cost, security cost, and tax and market levy) used in the model, explained about 59.7% of the variations in the marketing margin. The result also showed that transportation costs (X1) and storage costs (X2) had a positive effect on marketing margin, which means that the increase in transportation and storage cost will cause an increase in marketing margin while tax had a negative effect, implying that an increase in tax would lead to a decrease in marketing margin and vice-versa. These findings are in agreement with Ekunwe and Emokaro (2009) who reported that transportation cost and other variable were the main component of income realizable from snail marketing in Benin. Marketing constraints faced by the egg marketers Nine items were ranked on a five Likert type scale in order to estimate the relevant variables that acted as constraints on marketing of poultry eggs in the study area as shown in Table 5. According to the marketers, Broken eggs was the major problem affecting them, and this problem is associated with other problems, such as Inadequate and High Transportation, which was ranked the second most important problem. Poor credit facilities were also identified as a constraint, as well as too many market charges. Theft, High Tax, Lack of market information, Inadequate Storage were of least importance. The finding is in consonance with the findings of Okpeye and Ellah (2017) who found inadequate capital as a great constraint to the marketing of poultry egg in the South part of Nigeria, and Emokaro et al. (2016), who found finance to be one of the major constraints affecting poultry egg production in Benin city, Nigeria. This shows that credit facilities are hard to obtain, discouraging poultry egg marketers and farmers from partaking in the profitable enterprise. TABLES Table 1: Socioeconomic characteristics of egg marketers Frequency Percentage AGE Less than and above 3 5 SEX Female Male MARITAL STATUS Married Single Divorced 5 5 Widow EDUCATIONAL LEVEL Non Formal Education Primary School Secondary School Tertiary Education EXPERIENCE Less Than Jun and Above Table 2: Marketing Margin Analysis for the egg marketers per crates in the study area Items Amounts (N) Average transportation costs per crate 7.81 Average security per crate of egg 1.39 Average storage cost per crate of egg 9.07 Average market levy 1.00 Average tax per crate 2.44 Mark-up per crate Marketing margin per crate Source: Field Survey, 2015 Table 3: Profitability analysis of egg marketers in the study area Items Amount (N) Percentage Cost of Purchase 168, Cost of Transportation Storage cost Security Cost Market Charges Tax Total Variable Cost 174, Fixed cost 292 Total cost 174, Total revenue 195, Gross margin 20, Net return 20, Return per naira 0.12 Benefit cost ratio 1.12 Source: Field Survey, 2015

5 Int. J. Agric. Mark. 198 Table 4: Effect of Marketing Cost on the Magnitude of Marketing Margin Independent Coefficients Standard t-values variable error Constant 1.513* Transportation 1.055* Storage 1.110* Security Tax Market Levy R 2 =0.597; F value= , Source: Field Survey, 2015 * Represents coefficients at 5% significant Table 5: Constraints faced by the Respondents in The Study Area Constraints Mean Value Theft 2.17 High Tax 1.8 High Transport 3.25* Poor Credit Facilities 3.50* Lack of Market Info 1 Too Many Charges 3.09* Inadequate Storage 2.22 Inadequate Transportation 3.35* Losses Due to Cracked Eggs 4.19* (Mean value of > 3.00 CONCLUSIONS The findings from this study showed that poultry egg marketing is dominated by women who are fairly educated and experienced in this field. The results also showed that poultry egg marketing is a profitable business in the study area irrespective of the problems militating against it. It was also shown that too many market charges, poor credit facilities and bad roads, which caused loss of eggs due to cracking, were the problems most faced by the egg marketers. Transportation cost and Storage costs had a positive effect on the marketing margin. Marketing of egg is highly profitable and can also be increased if the problem militating against it is looked into. RECOMMENDATIONS Based on the findings of this study, it is highly recommended that governmental and non-governmental organizations set up credit facilities for the people engaged in marketing of poultry eggs. Also, when these credit facilities are available, awareness should be created using agricultural extensions. The egg marketers should be encouraged to form association or cooperative societies, thereby, easing one of the major constraints faced, which is lack of credit facilities, as they can collectively obtain loans at very low interest rates to finance their business. The government can do their own part by renovating existing bad roads so as to reduce the major constraints faced by the egg marketers and this will help in getting the eggs to the market in time and in good shape. REFERENCES Abanikannda OTF, Olutogun O, Leigh AO and Ajayi LA, (2007). Statistical Modelling of Egg Weight and Egg Dimensions in Commercial Layers. Inter. J. Poultry Sci. 6: Afolabi JA (2002). An Analysis of Poultry Egg Marketing in Ondo State Nigeria, Proceeding of the 29th Annual Conference of the Nigeria Society for Animal Production (NSAP), Held at the Federal University of Technology, Akure, March 17th 21 st. Banerjee, G.C., (1992). Poultry Production, Oxford: Oxford and IBH Publishing Co. PVT. Ltd. Barbut S (2001). Poultry Product Processing: An industry guide. Boca Raton, Florida: CRC press LLC. David West KB (2008). Review of livestock development in Nigeria in the 20 th century. In Osinowo, O.A., (Ed.) Animal Agriculture in West Africa: Proceedings of the joined silver anniversary conference of the Nigeria Society for Animal production and West African Society for Animal production, inaugural conference, Abeokuta, Nigeria. (pp.127): Abeokuta, Nigeria :Sophie Academic Services. Ekunwe PA, Alufohai, GO (2009). Economic of Poultry Egg Marketing in Benin City, Edo State, Nigeria. Inter. J. Poultry Sci. 8: Emokaro CO, Akinrinmola FK, Emokpae OP. (2016). Economics of Backyard Poultry Farming in Benin City, Edo State, Nigeria. Nigeria.J.Agric.Food and Envr. 12: Emokaro CO, Ekunwe, PA. (2009). Determinants of Income Realizable from Snail Marketing in Benin City, Nigeria. J. Agric. Forestry and Fisheries. 10: Esingmer, M.E., Animal Science Series, Daurille, Illnois: Interstate Publishers. Mohammed AB, Mohammed SA, Ayanlare AF, Afolabi OK. (2013). Evaluation of Poultry Egg Marketing in Kuje Area Council Municipality of F.C.T Abuja, Nigeria. Greener J. Agric Sci. 3: Oji UO, and Chukwuma AA Technical Efficiency of Small Scale Poultry-Egg Production in Nigeria: Empirical Study of Poultry Farmers in Imo State, Nigeria. Research J. of Poultry Sciences, 1: Okpeye MY, Ellah GO. (2017). Analysis of Poultry Egg Marketing in South South Part of Nigeria. Global J. of Agric.Research. 6: Olayide SO, Heady EO (1982) Introduction to Agricultural Production Economics,University Press Ibadan pp Olukosi JO, Isitor SU, Ode MO (2007). Introduction to Agricultural Marketing and Prices. 3 rd Edition. Principles and Application.

6 Oluwatuyi et al. 199 Accepted 21 November 2018 Citation: Oluwatuyi TB, Eronmwon I, Emokpae OP (2018). Economic Analysis of Poultry Egg Marketing in Oredo and Egor Local Government Areas of Edo State, Nigeria. International Journal of Agricultural Marketing, 5(2): Copyright: Oluwatuyi et al. This is an openaccess article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are cited.